Credit Suisse maintains the 'Outperform' rating on Balrampur Chini

BALRAMPUR CHINI

RESEARCH: CREDIT SUISSE

RATING: OUTPERFORM

CMP: RS 120

Credit Suisse maintains the `Outperform��� rating on Balrampur Chini and raises the target price to Rs 150 implying 25% upside to the current market price. Balrampur Chini is one of the most efficient sugar producers in India and therefore is well placed among cane-based manufacturers to benefit from high sugar prices in an environment of low capacity utilisation.

PBT per unit of sugar sold is estimated to rise from Rs 3.7/kg in FY09E to Rs7.7/kg in FY10E - to drive higher earnings, even as sales volumes decline from 6.8 lakh in FY09E to 5.5 lakh in FY10E, on account of lower sugar stock compared to the FY09 season.

Balrampur���s FY10 EPS rises by Rs 1.5 for every rupee rise in non-levy sugar realisation. Credit Suisse values the stock at 12x one-year forward EPS as at the end of March ���10, when there���s more visibility to the cycle, as the crushing season comes to an end and production figures are finalised.